Strong Q1 Gold Demand Bodes Well for Gold in 2022 and Beyond

rising gold demand

If you didn’t already know it from rising gold prices, gold demand this year has been very strong. Gold sales have been through the roof, as people from all walks of life have clamored for the safety and security that gold offers. There are numerous reasons people choose to own gold, but four in particular stand out.

  • Safe Haven
  • Inflation Hedge
  • Store of Value
  • Portfolio Diversification

1. Gold Is a Safe Haven

We’re seeing an incredible amount of safe haven buying of gold right now, and not just in the US. People are afraid of what the future is going to look like, and they’re looking to protect their wealth by investing in gold. Whether that’s opening a gold IRA or buying gold coins to store at home, gold demand is stronger now than it has been in a long time.

2. Gold Is an Inflation Hedge

Gold has also traditionally acted as an inflation hedge. During the 1970s, for instance, gold’s average annualized rate of growth was over 30%, while inflation peaked at 11% and stock markets gained a total of about 4% for the decade. That’s pretty incredible performance for gold, but it shows how well gold can do during a period of high inflation.

With inflation rising in the US and eroding the value of everyone’s savings and investments, it’s no wonder that more and more people are flocking to gold as an inflation hedge.

3. Gold as a Store of Value

Gold has also traditionally been regarded as a store of value. Certainly when compared to the dollar, gold has maintained its value quite well over the past century. While the dollar continues to lose value and purchasing power each year due to inflation, gold has continued to gain value over the years.

And gold is no slouch when compared against stock markets either. Since President Nixon closed the gold window in 1971, gold’s annualized rate of growth has been 7.82%, versus 7.81% for the S&P 500 and 7.48% for the Dow Jones Industrial Average. And its performance has been even more pronounced since 2001, with gold climbing at an annualized rate of 9.74%, versus 5.83% for the S&P and 5.66% for the Dow.

4. Portfolio Diversification With Gold

Finally, gold serves to help diversify investment portfolios. Many people think that investing in a mix of stocks and bonds is all you need to diversify your portfolio. But if your portfolio only invests in stocks and bonds, and only US stocks and bonds like many people, you’re concentrating your risk. A systemic crisis in the US could cause both stocks and bonds to lose value, which could harm the value of your portfolio.

Whether you choose to invest 5% or 50% of your assets in gold, gold can help diversify your investments and alter your risk profile. As an asset that isn’t as volatile as stock markets, and that isn’t subject to the swings of the boom and bust cycle, gold can help bring some stability to your portfolio.

US Mint Gold Coin Demand

With that out of the way, let’s take a look at how strong gold demand has been in the first quarter of this year. We’ll use US Mint sales data as a proxy, as the American Gold Eagle is one of the most popular investment gold coins in the country, being a favorite not only for those looking to buy gold to store at home, but also a favorite for gold IRA investing.

You may have seen reports indicating that March was a banner year for gold, with the US Mint seeing its highest demand for gold in 23 years. But the entire first quarter saw phenomenal sales, some of the best the Mint has ever seen. In fact, the Mint sold more gold than any other year except 1999, when Americans were diligently stocking up on gold to protect against Y2K.

Sales in March were similarly the second-highest ever, also only being surpassed by 1999’s figures, and were 135% higher than last March’s sales figures. Overall first quarter sales were 3.5% higher than last year, and 95% higher than the first quarter of 2020.

Comparing this year’s sales to previous crisis years, we find that sales were 312% higher than 2008, 25% higher than 2009, 57% higher than 2010, and 42% higher than 2011. In fact, total gold sales in the first quarter of 2022 were higher than total gold sales in 2017, and higher than total gold sales in 2018 and 2019 combined.

That’s an incredible indicator of just how popular gold is today. And what’s even more incredible is that this is coming at a time when stock markets are still incredibly high and the mainstream media is trying to push the narrative that the economy is “booming.” If gold sales are this high when the economy is still supposedly booming, just imagine how high they’ll get when the economy actually enters a recession.

We could very well see gold demand far outstrip demand from 1999, which was a record year for the Mint. Certainly everything seems to be lining up perfectly for gold, with geopolitical turmoil, rising inflation, and concern over the economy coming together to cause fear and uncertainty about the future, all factors which could play in to burgeoning gold demand.

Protecting Your Assets With Gold

If you’re worried about the effects inflation, war, or recession could have on your savings and investments, you’re not alone. Millions of Americans are in the same boat, and many of them have already made the decision to protect their assets with gold.

Whether you have retirement savings that you want to protect with a gold IRA, or cash holdings that you want to protect against inflation by buying gold coins, Goldco’s experts can help you to get what you need to defend your hard-earned wealth with gold.

With over a decade of experience helping thousands of customers buy gold, and some of the highest customer reviews in the industry, Goldco is committed to helping you secure your retirement dreams. Call Goldco today to find out how you can benefit from owning gold.

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